Bob Diamond has quit Barclays amid financial scandal and political
intrigue - and leaving a huge black cloud hanging over the bank he claims to love.

Barclays' shares might have rallied on news of his
departure, but many in the City are lukewarm at best towards the stock
given the towering challenges now faced by the bank.

City experts say the bank may look cheap at the current price, but are quick to point out it must now fill both the two top jobs and
clear up after the Libor rate-rigging debacle.

Under a cloud: Barclays must now replace top bosses and clean up after Libor scandal

What does the City say?

Nic Clarke of Charles Stanley said: 'As an investor one has to consider whether in the medium term it was better that Bob Diamond stayed on or departed.

'On the one hand Bob Diamond has been the driving force behind setting up Barclays Capital (around 50 per cent of 2011 Group profits and 80 per cent of 2010 Group profits), executing the Lehman's North American investment-banking acquisition in 2008 and building up Barclays Global Investors (sold to BlackRock in 2009).

'However, given the intense public anger towards banks, Bob Diamond’s pay, negative publicity surrounding various tax avoidance schemes and now the Libor scandal made it impossible for Mr Diamond to stay at the helm, move Barclays forward and repair the damage.'

Clarke predicted the search for a new chief executive would prove difficult, although Barclays has said it would consider both internal and external candidates.

And he added: 'Although Bob Diamond’s resignation should take some of the ferocity out of the intense criticism heaped on Barclays there is little doubt that the risk of holding the stock has risen substantially in recent days.

'A cloud is likely to hang over the stock until a suitable successor is chosen, the inquiries into the Libor scandal have made some progress without damaging the reputation of Barclays further and there is greater clarity on the ultimate cost of fines and litigation. However, on a technical basis the stock does look historically cheap.'

Charles Stanley stuck with its hold reccommendation on Barclays' stock but warned it would be watching events and reviewing business performance.

Richard Hunter, head of equities at Hargreaves Lansdown, said: 'Even prior to today’s announcement, the shares had fallen 37 per cent over the last year and 29 per cent in the last three months alone.

'Discussions at the Treasury Select Committee should throw some light on the internal turmoil at the bank, whilst it remains to be seen whether Barclays will eventually end up with some credit in being the first to hold its hand up over the Libor investigations.

'In the background, the spectres of further regulation, Basel 3 [new rules on bank capital holdings], exposure to Europe and slowing global economic growth continue to overshadow the sector, pushing the banks as a whole up the risk spectrum.

'It is difficult to estimate how much of the news is now priced in to the shares in the absence of more detail. One thing is for certain, namely that the consensus of the shares as a cautious buy has been creaking in recent days.'

Stock trend: Barclays shares are still well off levels seen before the financial crisis

Simon Denham of Capital Spreads said: 'The longer Bob Diamond had stayed on as CEO the more bad press the bank would have received as calls for his resignation would have grown and grown.

'Whilst most people don’t even know what Libor actually is, the headlines make for bad reading with banking bashing remaining rife.

'For banking in general Bob Diamond was seen as a figure head, one of the best in the class and has only been CEO for a short while having taken over from his predecessor.

'On the open the stock dipped some 4 per cent but has already climbed back from its lows and is back in positive territory so investors seem to have been quick to brush the issue aside.

'However it’s the ramifications for other banks that is now the question. How far does this go from here, as Barclays is just the first of many to be fined and so all the other CEOs will be nervously weighing up their options.'

Ishaq Siddiqi of ETX Capital said: 'The news came as a shock at first, given the hasty U-turn as Diamond suggested he will remain at the top yesterday. His departure, however, was not too much of a surprise given the pressure he faced in light of the Libor scandal.

'The stock has been hammered following news of the Libor scandal last week, offering investors an entry point to pick up the stock at a lower price.

'Despite today’s modest recovery for Barclays shares, the stock will remain under pressure on the back of growing uncertainties over the bank’s management team in the near term.

'And, with several major banks also reportedly involved in Libor manipulation, today’s events could be a sign of things to come for the UK banking system.'